Shapiro steps down from Shaw board

Long-running tensions between the management of Shaw Stockbroking and the firm’s major owner and industry veteran,
Harold Shapiro
, have deepened with Mr Shapiro yesterday resigning from the board.

Mr Shapiro owns 27 per cent of Shaw and has been at odds with the rest of the board over its refusal to consult with shareholders over indicative bids made for the firm early this year.

Yesterday he tendered his resignation as a non-executive director, citing irreconcilable differences with the board over a number of matters. In a statement sent to The Australian Financial Reivew, Mr Shapiro said these matters included the levels of executive salaries and bonuses, the firm’s dividend distribution policy and the board’s decision not to consult with shareholders on indicative offers to acquire Shaw.

Calls to Shaw Stockbroking’s chairman
Andrew Davis
were not returned yesterday.

A long-time managing director of Shaw, Mr Shapiro stepped down from running the business in September 2009. Around the same time Investec was brought in to look at the firm’s options. While several rival firms offered to buy Shaw, the board decided that none were in a form or price that was worth putting to shareholders.

Shaw is the only significant mid-tier broker without a tie-up with a major bulge-bracket firm. The firm has been looking for a new cornerstone investor but its difficulties in landing a deal demonstrate the tough conditions in the broking industry.

The firms accounts show it managed to return to an after tax profit of $941,707 in financial 2010, having made a $2.2 million loss in 2009. Revenue rose 41 per cent to $44 million. Employee expenses were up from $11.7 million to $13.1 million.

The firm’s key management personal received $2.2 million in compensation, including cash and shares, up from $868,781 in 2009.

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Mr Shapiro was one of three partners who founded Shaw in 1990. In his statement sent to the AFR, he said he had made it clear to the board when he stepped down in 2009 that he wanted to sell out. This conflicts with comments by Mr Davis in June that Mr Shapiro would remain a major shareholder.

“I’ll be in a better no-conflict position to act as a shareholder rather than as a director as I now seek to sell my shares," Mr Shapiro said.

He added he plans to remain as a consultant to the firm as well as a private client adviser.

Firms known to have looked at Shaw this year include Bell Potter, Ord Minnett and Wilson HTM.

It is understood several ­offers were received that fell within the $25 million to $50 million valuation that Investec had placed on the firm, but Mr Davis has previously rejected this, describing the indicative bids as “rubbery".